Disney splits with Netflix; creates new OTT service

Disney to pull films from SVOD service in 2019; launches new service; also new ESPN OTT

In a stunning move, The Walt Disney Company announced Tuesday it was pulling its movies from Netflix and launching its own subscription streaming service instead in 2019.

Starting with the 2019 theatrical slate, Disney and Pixar movies will stream exclusively on the yet-to-be-unnamed service, including Frozen 2, Toy Story 4, and the upcoming live-action version of The Lion King. Disney also plans to contribute fare from the Disney Channel, Disney Junior, and Disney XD to the new service.

Not part of the service is ABC and Freeform programming, which is found on HUlu, whereas Disney has a stake. Marvel and Lucasfilm (Star Wars) programming are also not part of the deal and plan to stay with Netflix – at least for now. Netflix co-produces Marvel’s shows, including Daredevil and Jessica Jones, and the upcoming Defenders and Punisher.

In the meantime, Disney has no plans on pulling any material from Netflix before the launch of its own service.

In addition, Disney plans to launch an over-the-top (OTT) version of ESPN beginning in 2018, featuring sports from Major League Baseball, the National Hockey League, Major League Soccer, various collegiate conferences and Grand Slam events. The service is being embedded within the ESPN app (yes, hockey fans, hockey has returned to ESPN – somewhat.) Disney is touting at least 10,000 live events for the OTT service a year.

Disney also announced it has increased its stake in BAMtech, originally founded by Major League Baseball and spun-off last year. Disney said it’s using BAMTech to launch the new Disney and ESPN services.

This is indeed a huge game changer in the streaming world. In an interview with CNBC, Disney President Bob Iger said: “This represents a big strategic shift for the company. We felt that having control of a platform we’ve been very impressed with after buying 33 percent of it a year ago would give us control of our destiny.”

Iger noted he was pleased with Netflix as a partner.

The moves come as more and more content providers are looking to control distribution of their product and more and more viewers are ditching pay TV. CBS for example, successfully launched CBS All-Access in 2014 and is now featuring original programming such as The Good Fight and the upcoming Star Trek: Discovery. A few months ago, Turner’s Boomerang launched an OTT service featuring animated series from its Hanna-Barbera and Warner Bros. Cartoon libraries. HBO already has its own streaming service and FX and AMC are in the planning stages to do likewise.

Meanwhile Netflix is investing more and more into original programming, notably is acquisition of Millarworld Comics on Monday, hoping to turn some of their titles into television properties.

The Disney announcement came ahead of its second quarter earnings report, where ESPN once again hurt its bottom line. The sports cable network contributed to a 23 percent drop in its operating income. The studio is also hurt by its continuing struggles at ABC, but the future does look bright with American Idol arriving early next year and has reliable performers with The Bachelor/Bachelorette and Dancing With The Stars – not to mention the continuing ratings dominance of WLS-TV (ABC 7) here in Chicago and its other O&Os in New York, Los Angeles, and Philadelphia.